CFS Retail (CFX)

While there is some nervousness about how retailers fared over Christmas, their landlords may offer some opportunities.
CFS Retail Property Trust
’s security price lagged the strong rises of its peers last year, but a possible tightening of the yield at which the trust trades may be an opportunity for investors. The trust trades at a divided yield of about 7.1 per cent, much higher than its peers, on Bank of America Merrill Lynch numbers. The trading price’s discount to net tangible assets of about 7 per cent also looks attractive. These points have led the broker to upgrade the retail trust to a “buy" rating. But it cautioned that growth may be lower than Westfield Retail Trust, albeit still positive. The trust has more B-grade malls which may suffer from negative net operating income growth. This is expected to be offset by growth from the trust’s discount DFO outlets. The performance of specialty tenants will be closely watched.